IT Costs Top Worries for Financial Services Execs

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Financial services firms are most concerned with the rising costs for information technology infrastructure as they try to compete with newcomers who may be more responsive to new technology, according to a new survey.

Concerns over IT costs topped regulation or cyber attacks in the survey of financial services executives by global risk adviser Willis.

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“There is a rise of new entrants that are using new technology,” Mary O’Connor, global head of Willis’ financial institutions group, told Reuters. “Banks know they need to respond to that.”

Banks and insurers have been seen as slow in responding to new technology, leaving the door open for newcomers to steal market share.

Second on the list of executives’ concerns were macroeconomic issues, such as the impact of quantitative easing. Regulation came in third, Reuters said, with “the increasingly heavy rulebook prompting people to leave the sector or move to more lightly-regulated firms.”

Talent could defect to financial technology firms, or even mobile phone companies that are not required to comply with any financial market regulation, O’Connor said.

The fourth-biggest concern was that widespread use of technology is creating new risks such as cyber crime.

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One response to “IT Costs Top Worries for Financial Services Execs”

The insurance companies have failed to modernize their IT and rely on a labyrinth of archaic systems with new stuff built on top held together with bailing wire. In addition their response times and transactions costs are awful. It takes a life company a month to issue a policy. Their management and IT teams are not capable of the fast transition they need. The industry is ripe for new competitors without these legacy systems, costs and processes.